Amazon HQ2 battle moving to Nevada skies with drones

As the CEO of drone company Flirtey, Matt Sweeney believes he has a front-row seat to a future that can’t come fast enough.

“One day, you’ll go look out a window and see Flirtey drones delivering defibrillators or food or drinks,” Sweeney said. “It will be as common as seeing a truck delivering packages on the road today.”

Before getting to the future, however, there’s still the matter of surviving the present. For drone companies such as Flirtey, getting in prime position for what’s to come means being at the forefront of drone testing. It’s an issue that is now shaping a battle in the Silver State that is pitting several Nevada drone startups with one big player: Amazon.

A big part of getting an advantage in research and development involves taking advantage of special programs, such as Nevada’s designation as one of seven drone test sites nationwide approved by the federal government. These initiatives allow for flights and tests that would otherwise be prohibited, particularly by laws that have yet to catch up to the burgeoning industry.

“We’re only able to move fast as the regulations (allow us to),” said Mike Richards, CEO of Drone America. “We’ve designed and built systems in and around those requirements.”

This makes participation in a newly announced Federal Aviation Administration pilot program a top priority for drone companies. First announced in an Oct. 25 memorandum from President Donald Trump, the Unmanned Aerial Systems Integrated Pilot Program will initially pick five public-private applicants for fast-tracked testing. The program’s goal is to help speed up the incorporation of drones into real-world use.

Possible applications of drone technology include land and agriculture surveying, fire mapping, package deliveries, search and rescue, and medical transport. Flirtey, for example, recently started a partnership with Reno-based ambulance service Regional Emergency Medical Services Authority to study drone delivery of automated electronic defibrillators ahead of paramedics during cardiac arrest calls. Being part of the FAA pilot program means the program could be implemented more quickly.

“This program will allow us to fast-track the approval for sending (defibrillators),” Sweeney said. “It will result in increased survival rates and ultimately save lives.”

With the Nevada Governor’s Office of Economic Development spearheading efforts to apply on the state’s behalf, it would seem that Flirtey and Drone America — both companies based in Reno — would be a shoo-in for inclusion in the state’s list of private partners. During its successful application for the FAA drone test site designation a few years ago, for example, GOED touted an inclusive statewide approach that included various stakeholders. This made Nevada the only site that was listed as a state in the list of approved locations.

As the first Nov. 28 deadline for the new FAA pilot program came to pass, however, Flirtey and Drone America have yet to receive confirmation from the state on whether they will be part of the application or not.

“I don’t know why it’s taking so long,” Sweeney said. “The longer they take, the harder it is to take a unified approach.”

Amid the delay, concern is rising among some in the industry that the state is planning on taking a different tack.

Several sources, including Sweeney and Richards, say that talk within the state’s drone circles about the FAA application indicate that GOED is looking to join forces with a drone partner headquartered outside Nevada, one with major clout in the business industry and is also being wooed to come to Las Vegas. Richards says he does not know who the business is. Sweeney declined to comment about its identity.

One company that fits the description is Amazon. The online retail giant continues to invest in its own drone delivery program called Prime Air, which is seen as a key component of its same-day service’s future. Amazon is also being courted by the state to build its high-profile HQ2 project in Las Vegas, with Nevada facing stiff competition as one of 238 entities that submitted a proposal to host the retailer’s second U.S headquarters.

The Governor’s Office of Economic Development declined to comment when asked by the Reno Gazette Journal if it was planning to partner with a company headquartered out of state as part of its application for the drone pilot program. Amazon, which was reached on Monday, also declined to answer if the company was working with GOED as part of Nevada’s application to the new FAA initiative.

“We have a longstanding practice of not commenting on rumors or speculation and cannot provide any information on this subject at this time,” said Alana Broadbent, a spokeswoman for Amazon Prime Air, in response to an RGJ query.

Flirtey’s Sweeney says he does not have a problem with having other entities included in the list of private partners, which is allowed under the proposed drone pilot program. Flirtey’s preference is to have a unified approach that includes many of the state’s stakeholders, including rival companies such as Drone America, Sweeney said. The approach was affirmed by GOED in the guidance notes that it sent to various state stakeholders on Nov. 8, citing the need for a “state-wide focus” in its application given Nevada’s past success with acquiring the FAA’s drone test site designation in 2013.

Rumblings about a major partner entering the equation, however, is causing apprehension among potential participants such as Sweeney, who worry that smaller Northern Nevada companies will be left out of the final application.

“The concern would be if they brought in outside entities while, in the process, excluded drone companies based in Nevada,” Sweeney said. “Isn’t the mandate of GOED to support local businesses and local job growth in Nevada … as opposed to bringing in outside entities?”

Despite being headquartered in Seattle, Amazon is no stranger to Nevada. The company has several facilities across the state, including a 630,000-square-foot fulfillment center in Reno. The company also started construction this year for a second North Las Vegas facility and employs thousands of workers in Nevada, further expanding its economic impact on the state.

Amazon’s existing Nevada ties, combined with its large footprint, makes it a daunting rival for any business, including the state’s drone companies.

In the world of drone businesses, Flirtey is no slouch. The company lays claim to many industry firsts, including the first FAA-approved drone delivery in the United States on July 17, 2015. That Flirtey F3.0 hexacopter now sits on display at the Smithsonian’s National Air and Space Museum in Washington, D.C.

Flirtey also raised $16 million in new investment in February, which it says it will invest in more jobs that will benefit the local economy. Compared to Amazon and its market cap of more than $570 billion, however, even fast-growing startup Flirtey — which doubled in size during the past year — is just a blip in the radar. From the perspective of economic impact alone, Amazon is the more attractive prize.

Picking a partner, though, should not be an either-or proposition because there is more than enough space for everyone on the table, Sweeney said. This includes the new FAA pilot program, which allows public entities to have multiple private partners in their application.

One option for interested companies that are not included in GOED’s partner list is to submit a request to the FAA to be added to the program’s interested parties list, which allows them to be matched up with potential partners. Sweeney, however, called the option a longshot.

“There are over 1,000 companies on the interested parties list,” Sweeney said.

Instead, Flirtey is also partnering with another public entity, the city of Reno, to boost its chances of taking part in the new pilot program. The Reno City Council unanimously passed a resolution on Nov. 15 designating Flirtey as its lead commercial partner for its own application, which is separate from GOED. The city already submitted a letter of intent to apply for the program prior to the first Nov. 28 deadline.

Scott Gilles, legislative relations program manager for the city of Reno, says the reasons for applying to the program are twofold.

“First, it’s important to partner with and support local businesses that can use our help,” Gilles said. “Being part of the program also allows us to be involved in some of the larger discussions about what makes sense from a regulation standpoint (for drones) at the local level.”

The Governor’s Office of Economic Development, meanwhile, noted that there is still time before the final deadline. Although letters of intent were due on Nov. 28, the deadline for the actual application is at 11 a.m. Pacific Time on Dec. 13. GOED also will be making a final decision about its application soon, likely within the next two to three days.

Despite concerns about politics potentially playing a role in Nevada’s application, Flirtey’s Sweeney and Drone America’s Richards are still hopeful about being included in GOED’s list of private partners. Even inclusion does not guarantee success as Nevada is competing against several other applicants for just five initial slots. Marcia Alexander-Adams, a spokesowman for the FAA, declined to talk about the selection process, citing procurement reasons.

Richards, whose company aims to start moving into drone mass production by late 2018, struck a more pragmatic tone about potentially being left off Nevada’s list.

“We still have to stick our nose down and do our best work every day to make this a good opportunity for everyone,” Richards said. “I tend to not get tied into politics — at the end of the day, there’s no point in us getting upset about it.